U.S. Investors
Currently, real estate investing opportunities at Sharestates are open only to accredited investors and foreign non-U.S. investors.
The SEC defines an accredited investor as a high net worth individual with total assets equal to $1 million or more, either alone or with one’s spouse, outside of one’s personal residence, or whose earned income equaled $200,000 (or $300,000 with a spouse) in each of the previous two years with the expectation that the current year’s income will be the same or higher.
For institutional investors, an accredited investor is one with assets in excess of $5 million as long as the institution was not formed specifically for the purchase of the target security and as long as the target security is purchased by a sophisticated investor or all equity owners of the institution are accredited investors.
As of 2021, the SEC has updated the definition of an accredited investor to include the following:
Individual Accredited Investors
- Maintain in good standing their Series 7, 82, or 65 licenses
- Brokers, Advisers, and Private Placement Reps
- Hold and maintain in good standing a specific, verifiable professional certification, designation, or credential as designated by the SEC via Commission Order
- These appear to be case by case
- Are a “knowledgeable employee” of a private-fund issuer of securities as defined under rule 3c-5(a)(4) of the Investment Company Act
- an executive officer, director, trustee, general partner, advisory board member, or similar, of the private fund or an affiliated management person, or an employee of the fund or “affiliated management person” who participates in investment activities
The ruling also expanded the definition to include certain entities:
- SEC- and state-registered investment advisers and exempt reporting advisers under Section 203(m) or Section 203(l) of the Advisers act
- IA based in the US with $150mm under management and all clients are private funds
- Rural Business Investment Companies as defined under Section 384A of the Consolidated Farm and Rural Development Act
- LLCs, other corporate entities
- LLCs with at least $5 million in assets
- Any entity owning “investments” in excess of $5 million, with “investments” being defined in Rule 2a51-1(b) of the Investment Company Act
- Securities, cash, real estate, cash alternatives, commodities, basically anything that’s normally considered an investment
- Certain family offices as defined in the “family office rule” under 17 CFR § 275.202(a)(11)(G)-1 with at least $5 million in assets under management
- IAs with only family clients, grandfathered clients notwithstanding
Non-U.S. Investors
Sharestates is open to foreign investors (also known as “non-U.S. persons”). To be eligible to invest as a non-U.S. person, you must
- Complete a W-8BEN (for an individual) or W-8BEN-E (for entities) form*
- Provide a copy of your unexpired government photo ID*
- Have a U.S. bank account
Visit the Sharestates Glossary to see the IRS definitions of a U.S. person and a Non-U.S. Person.
